WASHINGTON -- The California Pollution Control Financing Authority will save $6.4 million in bond authority under the private-activity volume cap, thanks to a recent Internal Revenue Service private-letter ruling that a bond lawyer says may have wide application in the municipal industry.

In 1992 and 1993 the authority obtained cap allocations for, and sold two issues with, a total face amount of $636.7 million. Now the IRS says the authority needed an allocation based only on the actual issue price, which was about $630.3 million because the bonds were sold at a discount.

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